Skype to become public company

April 15, 2009 |

Skype to become public company

By John Lister

Skype to become public company eBay is planning to sell off Skype in its entirety through a share issue. But there’s some concern investors might steer clear seeing it as eBay ditching a firm it can’t otherwise dispose of.

The sale will take place through an initial share offering (a stock market launch) in the first half of 2010. Unlike some such offerings, this isn’t merely a fundraising exercise: eBay plans for Skype to be a totally independent firm after the sale.

At the moment the share issue is merely a plan, and it’s possible it’s a negotiating tactic to find a private sale. Business Week reports that, after paying a total of $3.1 billion to buy Skype in 2005, eBay has only attracted one bidder for the firm: a group headed by Skype’s original owners who are offering less than $2 billion to buy it back.

Analysts say selling Skype through a share issue could raise $3 billion to $5 billion, but that’s something of a gamble and depends on how well general market confidence has recovered by next year. EBay may instead be banking on talk of a share issue attracting interest in a private takeover from other companies, sparking up a bidding war so that the firm can at least come out even on the deal.

The original purchase of Skype was made with the idea that it could be integrated into eBay’s auction services to make it easier for buyers and sellers to communicate. That’s proved something of a washout.

This isn’t the first such purchase eBay wants to go back on. Its recently sold StumbleUpon, a Web site recommendations site, back to its original owners and is reportedly considering selling off ticket sales site StubHub.

While it doesn’t look great to be scrambling to get rid of purchases without taking a financial hit, it probably makes sense for eBay to concentrate on its core businesses during a rough economy. Meanwhile Skype’s potential is likely stronger under a management team which understands the internet voice calls market better, meaning a private sale could be the best option for its future.